Here’s how we made money on Roku (ROKU) this morning. (August 09, 2018)


Roku ( NASDAQ: ROKU ); just real quick on this video. We held a trader training session this morning, that I do every so often, to learn to trade the opening rotation and this was a biggy. This worked out really well. On a percentage basis, traders made pretty good money, not 21 percent because that is from the low but from the open, which we were able to get in at about 6 points.

So how do you tell the difference between a gap and a crap and a gap and a run? You could see it right here on the 5-minute chart. The stock gapped up; what you do is, you wind up waiting to see whether the stock gaps up, what, about 10 percent or so, a little more than that, wait until you see if there are sellers. This is a big move; all eyes on Roku ( NASDAQ: ROKU ), right? You wait to see if there are sellers; if there are then short the stock or at least stay away from it. Or if you are long, take your cue, take your profits. Why? Because everybody else is; right?

If the stock, instead, is staying up above this level for a bit, there are methods for looking for that, we won’t go into that here, but if the stock stays up above this level then you stay long and you take it for a ride. That is what we did today. There was a similar situation with Stamps ( NASDAQ: STMP ) only the other way.

But with Roku ( NASDAQ: ROKU ) here is what I want to point out: This is a big move higher. But if you look and see where this resistance line is from the all-time high, it is very, very close to this level; this is a recent IPO, it hasn’t even been trading for a year. So if the stock starts breaking above $60.00, on a percentage basis, there is not that much distance between here and $60.00, 4-5 percent or something like that, which actually seems like a lot. But from a chart perspective, I am looking at this as, if this is the high here, we’ll call it $60.00, if this is the high then it is also a level where I would anticipate sellers to appear. There is about 4 percent of room to the upside, about $2.70.

If you are looking to buy Roku ( NASDAQ: ROKU ), I wouldn’t be shorting this stock, I just wouldn’t. This kind of power move, on this kind of volume, guys, almost 40 million shares traded today and the stock closed very close to the high of the day, that’s a stock that is in demand. If you want to buy it don’t buy it at 57.32 because you want to get in early; it’s got a $60.00 ceiling.

I would rather buy it at $60.32 than $57.32 because at least I have a new reference for where support is. Right now, you could see the stock pull back 10 percent and there would really be nothing wrong with the pattern. It would just be a stock that rallied a lot; got ahead of itself and will drift sideways for a bit and then maybe ultimately in a month or two start to break out again. But right now the stock is up so close to resistance that I just don’t think you want to be buying it at this point. And if you are long this stock, guys from today, maybe set your stop a little bit below $55.00. Don’t give up more than half of what you made here on this day trade.

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